How Consumers and Communities Can Benefit From 'Buying Local'

Comparison shopping between independent stores and chains is about overall value, not just price.

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Four blocks from my house on the north side of Chicago is an independent toy store that has bailed me out with a last-minute birthday gift more than a few times. The knowledgeable proprietors peddle geodes to German-engineered wind-up trains, bug-collection kits to theatrical costumes. Perhaps more important than their inventory, they've kept alive that elusive remnant of the retail experience—service. They gift wrap for free year-round.

"Indie shopping" is a conscientious effort to patronize independents, or locally owned businesses, over chain stores when it's possible to do so. "Buy Local" campaigns draw the support of like-minded citizens and community groups, particularly as businesses and consumers continue their slow crawl from recession. The pro-indie argument usually centers on community benefits, from social interaction to tax revenues. There's an impact on the wallet as well.

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Chain patrons typically cite prices and product variety when they opt for big-box stores. Internet shoppers do so for convenience. Plus, many individuals who might make the choice to shop locally find themselves forced to hit the chains, as downtowns and neighborhood shopping clusters have shrunk dramatically over the past two generations. That's true of both small towns and bigger cities.

But comparison shopping between independent businesses and chains is about "overall value, not just price," says Jeff Milchen, co-founder and outreach director at the American Independent Business Alliance. "There are other factors, such as service, selection, durability. You have to look at the lifespan of products before determining whether they are more expensive than at chain stores" where higher sales volume tends to lower price tags.

Milchen recalls his time in the landscape industry. He learned that the higher-end makes and models, and accompanying service, of lawnmowers he bought through a locally owned seller topped what he assumed to be a more appealing cost option at a home-improvement chain.

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The energy costs typically associated with shopping at big shopping complexes or standalone chains must also be accounted for. "We've been increasing our driving significantly over the past several decades, and it's due almost entirely to shopping," says Milchen. "Plus, time is money."

Advocates say the decision to buy locally should be a lifestyle choice that reflects a commitment to the community. In one measure of community impact, consultancy Civic Economics, in 2004, conducted the Andersonville Study of Retail Economics, a fact-finding mission commissioned by Chicago's Andersonville Chamber of Commerce and the Andersonville Development Corp.

The study examined the economic impact of 10 local businesses in the Andersonville commercial district against that of chain businesses in the area. The study's findings: Of every $100 spent at local businesses, $68 remains in the Chicago economy, while of every $100 spent at a chain, $43 remains in the Chicago economy. For every square foot occupied by a local firm, the local economic impact is $179. For every square foot occupied by a chain firm, local economic impact is $105.

Although he was not referencing the Andersonville study specifically, Milchen, of the Independent Business Alliance, says his association's efforts are sometimes undermined by statistics that show a too-favorable and unrealistic gap in the community revenue benefits of independent business over national chains. Milchen prefers to look at it this way: Shopping at locally owned establishments can leverage community funds times three, on average. For example, by supporting a local clothing boutique, a consumer is also supporting a local attorney, tax preparer, and printer. Local businesses tend to source small manufacturing and banking needs closer to home as well.

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Certainly, there are other retail realities. The existence of any business, chain or not, is often preferred over an abandoned storefront, and will better serve communities void of key supplies for everyday existence. While I happily patronize my local toy store, the reality is that big-box retailers that include a grocery section may just be the saviors for the vast "food deserts" across other parts of my home city, Chicago. There, zero grocery options, especially fresh food, exist for blocks on end.